The time is ripe for reform – and democratisation

Editorial

To a question put to Dr Vinaye Ancharaz, International Economic Consultant by this paper, last Friday about whether the current pandemic provides us with a once in a 100-year chance to shake up the system, revisit our economic structures and policies and drive the economic democratisation agenda – in other words whether it’s feasible in the current difficult economic circumstances to do so -, his response should prompt Government to resolutely take action towards that end, where the former Labour government fell short. Research shows that the toughest reforms have taken place at the peak of economic crises. So the time is ripe for reform, and the government knows it well, stated Dr Ancharaz.

The authors of the ‘Framework for a Labour Party Economic Democratisation Policy’ (as worked out by its then Economic Democratisation Commission) and which constituted its main electoral plank for the 2005 general election, had in December 2004 promoted the Party’s resolve to ‘unequivocally embrace an approach that will bring about a democratisation of the ownership and control of economic assets… achieve international competitiveness whilst at the same time integrate historically disadvantaged groups in the economic mainstream’. Further, they added that ‘Mauritius is badly in need of an inclusive society with chances of growth in fairness to everybody, and this cannot be achieved through the maintenance of a social structure which is non-racial only in words and without an equitable restructuring of the Mauritian economy’.

Some progress had indeed been achieved in certain sectors of the economy. However, the view has been expressed within the Party itself that the Labour Party led governments could have travelled much farther towards broadening the scope of economic opportunities if proper attention had been given to fixing the issues of teamwork and synergy among the stakeholder ministries like Finance, Tourism, Agriculture, etc., with ministers working at cross purposes and pursuing opposing agendas, and not in line with the official ‘discours’ in relation to the democratisation agenda during the latter part of the 10-year mandate. That agenda, according to insiders, also suffered from a weakening of the political resolve in anticipation of alliances to be contracted for the next general elections. Thus the care taken not to unnecessarily ruffle the feathers of the prospective ally – in that case the MMM.

A Labour Party-led government was expected to ensure that potential players be given a fair chance, that they should be empowered to overcome the obstacles which prevent them from contributing to increase the potential of the economy. Whoever can do this in a serious and disciplined manner to promote viable and sustainable businesses over time, notwithstanding epidermal, race or communal considerations, should have been given the affirmative action chance to make the breakthrough for the sake of growing our economy. It all unfortunately ended with some form of democratisation for the few and not the many. We need not expatiate further on that – nor on the few that benefited from the emergency procurement procedures that saw a handful of businesses taking the lion’ share in the importation and supply of drugs and medical equipments during the Covid-19 lockdown earlier this year under the present MSM-ML government.

Mauritius being a market economy, in practice there is a dense network of interconnections in the way business is done in different sectors with the result that the same persons who have, historically, captured the heights of the economy do so over and over again each time there is an interesting big new opportunity to do profitable business. Others are incapacitated right from the start. The resulting status quo means that none other than the existing capitalists make inroads into business in any meaningful sense to the exclusion of potential ‘intruders’. Worse still, this style of economic development has nurtured a business-foreclosing and rent-seeking mentality among the handful of our established business class.

Not only will persistence of this situation not unleash the entrepreneurial dynamism we should have been fostering to make new breakthroughs, it will also widen the already yawning inequality gap, as Thomas Piketty has demonstrated in his book ‘Capital in the 21^st century’.

The Covid crisis thus presents a historical opportunity – according to research findings as mentioned above – for the kind of transformative reform that is required to drive the economic democratisation agenda. This argument is further strengthened by the view of Prof Sing Fat Chu in his interview in this paper today, which is that government bailouts to organisations (such as the hotel and tourism sector) which do not pass what in Singapore is known as the ‘viability test’ are only going to perpetuate a status quo ante in lieu of changing to a much-needed new normal way of pursuing economic growth. This is something that needs serious consideration on the part of all stakeholders, and bold policy decisions for its implementation.

* Published in print edition on 29 September 2020